Environmental awareness is at an all-time high, and its profile continues to climb. The recent passage of the American Clean Energy and Security Act, and the recently wound-up Cash for Clunkers programs south of the border are just two examples of the sweeping changes in attitude that are occurring.
These changes are happening not only in governments and regulatory organizations, but in businesses and households around the world. A momentous wave of change is surging through all institutions and walks of life, and the ramifications of the developments in its wake are only beginning to emerge.
The most obvious changes are regulatory. The cap-and-trade limits on greenhouse emissions are going to have a great impact on all aspects of business, especially in real estate. The economic implications of having to reduce greenhouse gas emissions has one obvious dimension Ė that of whatever penalty or disincentive is levied by government on those whose properties are less environmentally sound. But this additional cost burden will also have profound implications on how markets and investors value properties. This will mean that environmental considerations that may once have been incidental or regarded as smaller details will become extremely important in the valuation of properties of all types in the coming years. Real estate professionals who want to remain competitive need to ensure that their skill set keeps pace to satisfy the new demands that capital will have in the 21st century.
Buildings, along with industry and transportation, are among the top three emitters of greenhouse gases. This means that all segments of the real estate industry are going to be heavily affected as market forces begin to factor the ecological soundness of properties in their calculations. Already, residential owners and home buyers can access a range of governmental programs and incentives to improve the ecological footprint of their properties through greater energy efficiency. The development of the Leadership in Energy and Environmental Design (LEED) ratings to certify the degree of environmental soundness in the design, construction, and operation of buildings across all real estate sectors has led to greater awareness and knowledge about green building issues. People who build, buy, sell, operate, and work in buildings are all far more aware about the sustainability of the physical structures in their lives, and their numbers and awareness will only grow.
Tenants in commercial buildings are interested in locating themselves in buildings that will provide lower operating costs, reduced environmental impact, and superior marketability of a good LEED rating or equivalent. At the investment level, green properties will present lower operating costs and thus a more effective addition to a portfolio than a similar property that is either less efficient or hasnít been assessed and is thus an unknown quantity. Furthermore, the marketability and prestige associated with greener properties is a useful asset now that will only grow in the future. The market is in transition towards a greater awareness of ecological issues, and is still determining exactly how to price green efficiency. This provides an excellent opportunity for savvy real estate practitioners to establish themselves as leaders by educating themselves and intelligently engaging clients on these issues.
Elden Freeman B.A., M.E.S, Broker is the founder and executive director of the non-profit National Association of Green Agents and Brokers (NAGAB). Freeman says he believes that Realtors across Canada can play an important role in educating their clients on increasing energy efficiency and reducing greenhouse gas emissions. (416) 536-7325; email@example.com.